FATBP-What do you think of the fact that the founder was indicted on Federal charges that he caused FAT and an affiliate to distribute $47 million for his personal use and benefit and that he failed to pay personal income tax of $7.7 on the amount. Plus other charges. Also that he is charging the company $1850 per hour for consulting and received over $5.3 million last year and that 3 of his sons are on the company payroll. It is a controlled company as they own over 50% of the common and almost no preferred. If there was ever a set up to screw preferred holders this is it. Maybe with an options level position.
Thanks for the response. I have followed the company for some time and was on the call when they announced the dividend suspension. . Preferred’s did not drop right away and I shorted some which I covered on the drop. I think I likely will take a modest position here. The preferred have dropped a lot more than the common on a percentage basis which is very unusual. The CCLD preferreds worked out well for me. However it is pretty unusual for them to start paying once they have stopped.
The prosecutor who brought the case has been fired. The expectation from the company is the charges will be dismissed and legal expenses will drop to the point FATB will be cash flow positive. Consensus from people I've talked to is the California AG shouldn't filed charges and the case is without merit.
As for the sons being on the payroll and the consulting fees, I'd say at $2.50 per FATBP share it's priced in. At $25 it isn't.
Ken Kuick also provides professional oversight. But it's a family-controlled company - I get it. I think the risk/reward is actually more compelling after the pref dividend cut.
FATBP-What do you think of the fact that the founder was indicted on Federal charges that he caused FAT and an affiliate to distribute $47 million for his personal use and benefit and that he failed to pay personal income tax of $7.7 on the amount. Plus other charges. Also that he is charging the company $1850 per hour for consulting and received over $5.3 million last year and that 3 of his sons are on the company payroll. It is a controlled company as they own over 50% of the common and almost no preferred. If there was ever a set up to screw preferred holders this is it. Maybe with an options level position.
Thanks for the response. I have followed the company for some time and was on the call when they announced the dividend suspension. . Preferred’s did not drop right away and I shorted some which I covered on the drop. I think I likely will take a modest position here. The preferred have dropped a lot more than the common on a percentage basis which is very unusual. The CCLD preferreds worked out well for me. However it is pretty unusual for them to start paying once they have stopped.
The prosecutor who brought the case has been fired. The expectation from the company is the charges will be dismissed and legal expenses will drop to the point FATB will be cash flow positive. Consensus from people I've talked to is the California AG shouldn't filed charges and the case is without merit.
As for the sons being on the payroll and the consulting fees, I'd say at $2.50 per FATBP share it's priced in. At $25 it isn't.
Ken Kuick also provides professional oversight. But it's a family-controlled company - I get it. I think the risk/reward is actually more compelling after the pref dividend cut.
(Apologies. I am just seeing this now.)